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London landlord sales

Journalist: Melissa Lawford, The Telegraph

ended 21. April 2023

To what extent are landlords selling buy-to-lets in London? Why are they selling up (tax changes/low rental yields/EPCs/mortgage rates etc)? Are they selling up more in London than in other regions, and if so why? To what extent are landlord sales becoming a driving factor behind supply in the London sales market? To what extent will this have a direct impact on house prices?

5 responses from the Newspage community

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Craig Fish
Director at Lodestone Mortgages
Most of our clients are London based, and those that are landlords are really stuck between a rock and a hard place at the moment. To date, most are choosing to continue for another couple of years just to see if things settle down, but they are giving serious consideration to selling up, as all the tax and legislation changes are having a significant impact on the viability of letting property. In some cases, it is costing them money due to the increased interest rates. Their only option is to increase rent, but many don't want to as they value the fact that they have good tenants in situ. We are now starting to see much more interest in purchasing a property further afield from London, and in particular in the Midlands and the North, where yields are much more favorable. I fear that if the 'sales' do start to happen that this fill have a greater negative effect on prices, but will then, of course, be good for first-time buyers.
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Rob Gill
Managing Director at Altura Mortgage Finance
While the environment is certainly tough for landlords with rising taxes, interest rates and regulatory burdens, much of the sting is being relieved by surging rents, especially in London. With London rents rising at the fastest pace for more than a decade according to the ONS, many landlords are quite comfortable and committed to staying in the market..
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Lea Karasavvas
Managing Director at Prolific Mortgage Finance
Landlords have been targeted for many years in budgets with increased stamp duty and the ability to claim tax relief on mortgage interest removed back in April 2020. However these pitfalls were somewhat mitigated by low interest rates.

This is the first time the buy to let market has been tested by increased stamp duty, no tax relief and more recently the CGT annual exemption reducing from £12,300 to £6,000 from April 2023.

We have seen more and more landlords questioning their profit margins with more now asset stripping and placing lower yielding properties on the market. Especially those with lower rated EPC ratings that will result in more costs for them to bring these to the required standards.

We expect more landlords to follow suit as the profit reduces and cost of borrowing rises due to high rates and high fees now associated with buy to lets at present, with some lenders charging 7% arrangement fees to get rentals to fit their stress testing models.
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Imran Khan
Co-founder & CEO at QuantumLoopAI
London landlords are facing an exodus from the buy-to-let market due to mounting challenges, including stricter regulations, tax changes, and rising interest rates. PropertyLoop has identified these factors as driving forces behind landlords' struggles, ultimately affecting both property owners and tenants. The rapid increase in compliance and regulations, such as EICR testing and EPC changes, has imposed extra costs on landlords. Coupled with the removal of mortgage interest relief and increasing interest rates, many landlords are struggling to make ends meet, leading to a concerning exodus from the market, with a knock-on effect on tenants. As rental properties become scarce, demand drives prices up, and tenants bear the brunt of increased costs. With Section 21 changes and rent control discussions looming, the market is becoming increasingly unattractive for landlords. Government policies must be reevaluated to balance the needs of landlords and tenants.
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Ashley Thomas
Director at Magni Finance
We haven't seen a max exodus with landlords selling as they are generally at a low loan-to-value and the rent has been increasing. This will be more likely for landlords with one property or homeowners who were considering keeping their existing property to let when they purchase a new main residence.